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ABI data shows increase in liability and application fraud

30th August 2019 - Author: Matt Sheehan

New data released by the Association of British Insurers (ABI) shows that the number of detected fraudulent insurance applications has increased by 5%, with the average value of detected fraud now in excess of £12,000.

In connection with this increase, ABI noted that the Insurance Fraud Bureau (IFB) has seen the volume of application cases under investigation increase by more than 65% since 2017.

“Improved reporting and easy access to shared intelligence are helping IFB members identify and close-down sophisticated criminal groups intent on harming businesses and their customers,” said Ben Fletcher, Director at the IFB.

“Although today’s announcement suggests the current strategy to tackle organised fraud is working, the broader picture is more complex,” he explained.

According to the ABI, the value of organised fraudulent motor insurance claims has increased from just under £96 million in 2017 to just over £99 million in 2018.

‘Crash-for-cash’ continues to be a key focus for the IFB with the volume of cases under investigation increasing almost 15% since 2017.

The nature of organised fraud also continues to change as criminal groups look to exploit opportunities in areas such as application, property and liability fraud where collaboration and enforcement are less developed.

For example, the scale of ghost broking operations has now reached an all-time high, with criminal organisations stealing customer’s identities using lucrative and unregulated online markets.

ABI data shows that organised liability fraud is now the second largest area after motor in terms of volume, with detected cases growing from 1.6 million in 2017 to 1.8 million in 2018.

In response, the IFB has been increasing its focus on organised claims farming, especially in areas such as fraudulent cavity wall insulation claims.

Opportunistic fraud continues to represent the majority of fraudulent claims, with 89% of the value of fraudulent insurance claims classified as opportunistic in 2018.

This kind of fraud is typically less predictable, ABI noted, and makes it difficult for insurers to anticipate the risk of a fraudulent claim.

The IFB has, however, been working with behavioural science specialists to develop key recommendations to help insurers influence common patterns of behaviour that can lead to a fraudulent claim.

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